Phoenix Manufacturing Ltd. has grown significantly and now operates through several specialised departments. The management wants to assign each…

1. Assembly Department – Standard Cost Centre The Assembly Department operates with fixed input-output norms, and standard quantities of materials and labour are established for each unit. Any deviation (variance) in cost is measured and analysed into controllable and uncontrollable cost. Since its output is measurable and the input-output relationship is clearly defined, it qualifies as a Standard Cost Centre, where the manager is responsible for controlling costs and complying with established standards. 2. Corporate R&D Lab – Discretionary Cost Centre The R&D Lab focuses on product innovation, and its output cannot be measured in financial terms. The performance of this department is evaluated only against the budget allocated. Because the input-output ratio cannot be defined and the cost cannot be directly linked to output, it is classified as a Discretionary Cost Centre. 3. West Zone Sales Department – Revenue Centre This department is responsible for generating revenue and achieving sales targets but has no control over production or administrative costs, except for selling expenses like commissions. As its primary responsibility is revenue generation, it is classified as a Revenue Centre, where performance is measured based on revenue achieved. 4. Global Operations Division – Investment Centre The Global Operations Division has authority over revenue, cost, and capital investment decisions. Its performance is evaluated on profitability as well as Return on Investment (ROI). Therefore, it is classified as an Investment Centre, where managers are not only responsible for profitability but also have the authority to make capital investment decisions.